Falvey Shippers Updates

Breakdown of Carrier's Liability on LTL Shipments

Posted: May 21, 2019 9:16:00 AM

Less than truckload shipping is a cost-efficient and effective freight method that classifies all freight based on its commodity, density, and ease of transport. This classification not only dictates freight rates, but also the amount the carrier is legally liable for in the event of loss or damage.

Carrier liability is the degree to which a carrier is responsible for freight loss, damage, and delay. There are limitations and exceptions, such as Acts of God and shipper negligence, but most importantly, the burden of proof lies upon the shippers to prove the carrier is liable.

To make sure your shipments are protected against any incident, we’re going to explain how carrier’s liability applies to different types of conveyances. In this article, we’ll focus on less than truckload (LTL) shipments.

Carrier’s Liability on LTL Shipments

For LTL shipments, liability coverage is determined by the carrier and varies based on freight class, packaging, commodity type, and other conditions. Generally speaking, carrier liability is established on a dollars per pound basis.

For new items, coverage usually depends on the freight class. Coverage increases with the class—this ranges from about $1-2 per pound up to $25 per pound for the highest freight classes. For used or resold goods, coverage typically starts at $0.10 per pound, regardless of freight class. While it’s understandable that shippers are looking for the lowest freight rates, keep in mind that carrier’s are able to offer low rates by also lowering their own liability coverage. By its nature, carrier’s liability is limited and will rarely cover the full value of your shipment (particularly if it’s used goods).

A common misconception is that declaring excess value to the carrier is the same as insuring your shipment. Excess value coverage simply raises the carrier's limits of liability, but the standard exclusions still apply and the burden of proof is still on the shipper.

Shipper’s interest cargo insurance is a cost-effective risk management tool in which shippers can utilize LTL shipping, while still having the peace of mind that their shipment is covered for its full value while in transit.

How Shipper’s Interest Can Help

When carrier’s liability falls short, shippers can make sure their freight is fully covered with shipper’s interest insurance.

Shipper’s interest insurance provides door-to-door coverage of goods against all risks of physical loss or damage. This is an effective solution for shippers because it protects you from financial loss for the full value of your goods, which mitigates any gaps in coverage. Plus, shippers don’t have to prove carrier negligence, only that the loss or damage actually occurred.

For companies managing a large volume of shipments (and manually reporting on all of them), look for a solution where shipper’s interest insurance can be obtained via an integration with your transportation management system (TMS). You should be able to add customized coverage to any and all of your freight and get instant quotes with a few clicks, in an automated system. It’s the easiest, fastest way to ensure your shipments are fully protected—and establishes a solid risk management strategy for your business going forward.

Need help determining if your LTL shipments are fully covered? Contact Falvey Shippers and we’ll talk through it.


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